The new money management
How fintech services are evolving and expanding

By: Martin DaksApril 27, 2020 12:01 am

Financial technology companies, or fintechs, are on a roll. The market for their services, which include streamlined ways to pay, receive and invest funds, was valued at about $127.7 billion in 2018, and is expected to grow to about $310 billion by 2022, according to some estimates.

The COVID-19 pandemic could affect the exact numbers, but many observers say fintech will continue to gain market share. Customer relationships are one of the big prizes that they’re chasing, according to a PwC report, “so the ability to deliver a premium experience will probably help determine the winners and losers.”

The shape of things to come

A COVID-19 driven economic shakeup is driving some changes for fintech investors, but experts say that fundamentals still matter.

“The entrepreneurs and teams behind a fintech or other ventures are the key component for investors,” according to Steve Socolof, managing partner of Tech Council Ventures, an early-stage investment organization created by the NJ Tech Council. “We’re working closely with existing investments to weather this crisis, but we also have a pipeline of possibilities and continue to engage in due diligence and take new pitches. We’re also adhering to social distancing guidelines with Zoom and other remote conferencing services.”

Right now, investors are especially excited about startups in the health care and the payment processing sectors, he said. “We’re currently invested in a company that provides remote behavioral health, which is particularly important right now given the stay-at-home orders. Payment processing is also huge, because of the tremendous money flows for mortgage servicing and other fintechs. A company can charge a small fee, but get a huge return because of the large volume they handle.”

Investors and entrepreneurs behind fintech and other startups are attracted to New Jersey in particular because of the state’s fundamentals, according to Bill Noonan, business development director and technology sector lead at Choose New Jersey.

“Almost every kind of company, including life science and fintech ones, have already established operations here and continue to come,” he said. “They like our talented, diverse workforce, and our location near New York City. Also, New Jersey has universities with tech-oriented undergraduate and graduate-level programs that help to create an intellectual pipeline of employees for advanced manufactures and other kinds of tech-based companies across a wide range of sectors.”